US Stocks Slip; Energy Shares Down As BP Oil Spill Continues

The stock market slipped Tuesday, led by a slide in the energy sector following BP's failure to stanch the flow of oil spilling into the Gulf of Mexico.

The Dow Jones Industrial Average recently slipped 18 points to 10119, off 0.2%. The Nasdaq Composite Index slipped 0.6%, while the Russell 2000 was down 2%.

The market's losses were tempered by new data showing that U.S. construction spending in April registered its biggest gain in nearly 10 years, rising 2.7%, and manufacturing activity expanded by more than expected.

Construction spending rose 2.7% in April.

Though those reports brightened investors' moods for the moment, analysts said that the broader concerns about global growth that led the market to a dismal May performance haven't been banished for good. Those worries have hit shares of commodity producers hard lately, in a trend made all the worse on Tuesday by concerns about possible broader fallout for the oil industry from the BP spill.

"You're already looking at a situation where oil prices have been under pressure because of the outlook for demand," said strategist Dan Greenhaus, of Miller Tabak. "That [stock-market] sector already had a lot of problems because of that, and now the BP situation just adds to the list."

Shares of BP were recently down 13.4%, on track for their worst one-day percentage drop since Oct. 3, 1974. Investors were particularly disappointed because early indications from the company were that the top-kill operation was succeeding. BP said it is working on deploying a so-called lower marine riser package containment system, but as with other attempts by BP, the system has never been attempted at 5,000 feet under water.

President Barack Obama spoke about the oil spill following a meeting with a committee examining the disaster. He noted that he has halted exploratory deep-water drilling along the Gulf coast for six months, until the commission's investigation is expected to be complete. The president said the findings may lead to legal penalties or new regulations for the oil industry.

The S&P 500's energy sector slid 2.9%, leading the index to a 0.4% decline overall. Transocean, the operator of the BP rig that exploded and caused the Gulf spill, fell 10%. Anadarko Petroleum fell 18%, while Halliburton was off 13%.

Meanwhile, crude-oil prices slipped to end below $73 a barrel, beginning June on a sour note. The commodity is coming off a 14.1% slide for May, the worst monthly performance since December 2008.

Worries about global growth continued to simmer Tuesday after two gauges of Chinese manufacturing showed slowing growth and the European Central Bank reported on the write-downs facing euro-zone banks. But those declines were tempered by a stronger-than-expected rise in U.S. manufacturing activity reported by the Institute for Supply Management and the biggest gain in monthly construction spending in almost a decade.

The dollar strengthened against the euro following a ECB report warning that euro-zone banks face EUR195 billion ($240 billion) of write-downs this year and next. But the U.S. Dollar Index, which measures the U.S. currency against a basket of six denominations, was flat, hurt by declines in the greenback's value against the British pound and Swiss franc.

Among stocks to watch, Kraft Foods rose 2.2% after the company said Cadbury PLC Chief Strategy Officer Mark Reckitt will leave as integration efforts continue since the two companies merged earlier this year.

Microsoft gained 1.7% after Asustek Computer, a Taiwan-based company, unveiled the Eee Pad, a tablet computer that will run on Microsoft software.

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